The end of Rupert Murdoch’s ‘Succession’ saga?

0:00Hello, Ed Conway here. Here is what might sound like a slightly random question. What do AirPods, bananas and a pair of shoddily made running trainers from the 1970s have in common? On the surface, not very much. But on my podcast, Stuff Matters, I will uncover the deeper stories behind each of them. You will see how together they tell a fascinating new story about the world we live in. The first full series of Stuff Matters is out now. Just search for it on your podcast app and follow. Coming up, the real-life succession. How Rupert Murdoch's son Lachlan thwarted his siblings' ambitions and guaranteed that he'd be the one to follow in his father's footsteps.

0:41Hello, Ed Conway here. Here is what might sound like a slightly random question. What do AirPods, bananas and a pair of shoddily made running trainers from the 1970s have in common? On the surface, not very much. But on my podcast, Stuff Matters, I will uncover the deeper stories behind each of them. You will see how, together, they tell a fascinating new story about the world we live in. The first full series of Stuff Matters is out now. Just search for it on your podcast app and follow. Hi everyone, Neil Patterson back with the Sky News Daily. And a question, have you seen Succession? If not, don't worry, because you might find it all sounds a bit familiar.

1:25Over four series, the black comedy followed the patriarch of a global media empire as his children, particularly sons Kendall and Roman, battle to take over when he dies. Now compare that to the big media news of the week. Rupert Murdoch, finally guaranteeing his son Lachlan, and not younger son James, will take over his global media empire when he dies. Lachlan is already chairman of News Corp and Nova Entertainment, executive chairman of Fox, The deal they've done simply ensures that he won't be ousted from those positions when his father passes away. But how did he do it? How bad did things get behind the scenes?

2:04And what do we know of the man? Rupert Murdoch wants to follow him. Well, we'll be exploring the latter with Lachlan's biographer just a bit later. But we begin with our business correspondent, Paul Kelso. And what a business it is, Paul. I mean, just start there. Tell us exactly what is in this global media empire. Essentially, we're talking about two entities, Fox, which handles the family's broadcast interests, which are now largely not solely, but largely in the United States. Fox News is the one everybody knows about. Used to have big entertainment holdings, 21st Century Fox, and the rest doesn't have those anymore.

2:39But it's Fox. And then it's News Corp, which handles the publishing holdings in the States. Wall Street Journal, New York Post, HarperCollins, the publishers in there. The one that many listeners will be most familiar with is the UK holdings. So the Times, the Sunday Times and the Sun. But it is an enormous set of holdings. Put a figure on it. Back of the fag packet calculation, Paul, what amount of value are we talking? In revenue terms, we're talking$35 billion last year for Fox and News market capitalisation in excess of 40. The profits don't always match that, but they are enormous holdings.

3:19and across Australia, the US, the UK. He doesn't just have largely profitable businesses with enormous reach. They have influence, massive influence, which he's always been happy to use. He certainly has. Why are people talking about this in terms of Shakespearean tragedy, Roman psychodrama, whatever you want to call it? I mean, if he wants to give his assets to one of his kids and not all of them, why can't he? because he put in place a family trust to handle the succession to prevent exactly that happening. I mean, the reason people are paying attention is because it is absolutely compelling.

3:59He's got a complicated family. This is a man with six children by three wives, but this story really is about four of them. Prudence, his eldest child from his first marriage, and then Lachlan, Elizabeth and James in order from his second marriage. And at a time when he presumably thought they would be his last children, he put in place a situation, a family trust to manage the family's ownership, the stakes in those various businesses that was split very simply. Four shares with Rupert Murdoch, with him, and one each for the four children. All of which raise the question that if and when he eventually passes, you are left with a trust with four votes equally shared, 25 % each.

4:42and that, as it turned out, was a recipe for a very, very messy succession. Explain why. You've got four kids, equal share to each of them. I mean, why wouldn't they be happy with that? The problem, again, is that Rupert Murdoch tried to stop it being simple. Having prevented a situation where he could just hand the business holdings on to one of his children, he then tried to override that. It essentially splits a little between the sons and the daughters. Prudence has always perhaps been the eldest, has been the least involved in the business. Elizabeth Murdoch ran her own successful production company, married Matthew Freud, a marriage that ended, but had a prominent role in British television production.

5:23But James and Lachlan, the two sons, have been in a impossible for outsiders not to see it as a race for their father's affections and for success within the business. They've both held senior positions from a very young age in Australia. James was prominent in the Asian businesses. James Murdoch was chairman and chief executive of Sky, owners of Sky News, for a while before the Murdochs sold that business. They no longer own it. But it's become clear, perhaps in the last decade, as Lachlan rose in the American business, which is where Rupert's attention increasingly was. And Lachlan looked to be the chosen successor, certainly was within the business.

6:04And then 2023, Rupert tried to make that concrete by trying to change the terms of that beautifully balanced family trust. So it was Lachlan Murdoch who had the control and the other three were eased aside and they did not like it. That plan was called Operation Family Harmony. And so successfully that the other three kids sued their father and their brother in a court case that was heard in Nevada. Sorry, just to be absolutely clear here, the chap who was trying to wrest control of his father's media organisation away from the rest of his family called it Operation Family Harmony. Yeah, he did.

6:41Perhaps he's been, some might say he'd been reading the publications he'd been responsible for. We've already compared this to the TV show Succession, just in terms of the enmity, the bitterness and the massive amounts of money that are at stake here. I mean, is that fair? Yeah, it is. And it's the inspiration. I mean, it's pretty compelling, isn't it? It's not just the scale of the business. It's the prominence of the business and the influence it will. And what's always made Murdoch fascinating is that he has never been apologetic about using the influence and reach of his titles and his channels to shape the world as he'd like it to be.

7:15We saw that most notably in the UK, 70s and 80s. Back Margaret Thatcher helped her, helped the Conservatives rule for a very long time. and most recently in the US, Fox's backing for Trump was pivotal. Lachlan has ultimately emerged victorious in all of this. But I probably shouldn't be crying the remaining three much of a river, should I? Yeah, the precise terms of the way in which they'll be reimbursed hasn't been made public, but the estimate is they'll be getting about$1.1 billion. Thank you, Daddy. Each. Yeah, so what that gives the business is clarity. gives Lachlan what he assumes, I assume he believes, is a victory.

7:56So am I to follow from your logic then that in his mind, rather than James, it's Lachlan that's the winner? In terms of what Rupert wants, absolutely. But if you're walking away as one of the siblings with more than a billion dollars on top of, presumably there's company for that money in the bank accounts already and you're ducking out of what is a fraught political climate and a very uncertain future, even for the size of those businesses. Look, they do very well. But the big question is what really happens when Rupert's guiding hand, and there's a question about how much he can guide anymore at 94, but when that is gone, because among his attributes, and people use lots of words, he had a genius for knowing the public mood, sometimes shaping it, sensing it, following it, and giving his audiences what they wanted.

8:45And that may not be a heritable trait. So while the leadership of this organisation is clear, its future success is far from guaranteed. Paul, thanks a lot. OK, so let's now try and find out a bit more about Lachlan himself. Paddy Manning is an investigative journalist for the ABC network in Australia. He's also the author of The Successor, The High Stakes Life of Lachlan Murdoch. Paddy, were you at all surprised that it was Lachlan that eventually emerged victorious? I mean, as you reported in your book, at one time, there was an assumption that when his father died, Lachlan would be sacked by his siblings.

9:24Look, I'm not surprised that Lachlan has emerged as the victor. I mean, the book was called The Successor. And that's for a reason, because it's been clear for many years now that Rupert has preferred Lachlan, has chosen Lachlan and wants him to take over. All the way back to the phone hacking scandal that, you know, fairly or unfairly tarnished the reputation of Lachlan's younger brother, James. So in a way, I'm not surprised. And I also did believe that a settlement was the most likely outcome of the litigation that we've seen over the past year play out in the probate division of the Nevada court.

10:05Rupert has made it clear since 1997 that he saw Lachlan as the first among equals of the Murdoch children, the three from his second wife who had entered the business. It's just a fact that Lachlan and Rupert are more closely aligned, both politically, but also in their interest in newspapers, which is, you know, if you look back through the history of News Corporation, that is where the company comes from. And yet, Paddy, despite this air of expectation for decades now that Lachlan was going to be taken over and taking over, you know, one of the biggest media groups in the world, you know, there is a degree of enigma surrounding the guy.

10:46I think it's because he spent a good chunk of his time in Australia. And so whereas in the UK, you've got a higher degree of awareness, obviously, of Rupert Murdoch, but also Liz, also James, who was, you know, chief executive of VSkyB and then News International based in the UK. But you have very little awareness of Lachlan over there. And I know that because nobody bought my book in the UK. Because there was like, who's Lachlan Murdoch? Who cares about him? Lachlan is much more private than his father. He does not, I think, aspire to be the same kind of political kingmaker that Rupert had been over his 70-year career.

11:25He's a different person. And yes, he does take some getting to know. And I've probably beat my head against that wall more than anyone. I think there are differences and there are also similarities with Rupert. What do we know of what he was like as a young man, both as a child and moving into his 20s? He, as a young man, was described as kind of the dutiful son. James, the younger brother, was more rebellious. They had an immensely privileged upbringing, you know, living in Manhattan. But yeah, Lachlan is the only one of the Murdoch children that really has ever spent a considerable amount of time in Australia.

12:09He wanted to learn the ropes. He read a biography of his grandfather, Sir Keith, and decided that he did want to enter the family business. That's where Lachlan decided he wanted to start his career. Whereas his older sister, Liz, was straight into television and ran her own television stations in America, went off to work at Sky in the UK. James was interested in new media and never wanted to move to Australia. Lachlan comes to learn the old-fashioned business of newspaper making publication in Brisbane. It's a kind of distinctive choice that he made. And presumably partly because it did endear him to his father, who was a newspaper man to his bones.

12:52But I wonder then what the state of the relationship has been like over the years with those siblings. There must be a degree of rivalry in a family like that. Well, I think particularly between Lachlan and his brother, James, there has been rivalry. Liz Murdoch interestingly decided it was easier to be a Murdoch outside the family business than inside it. And she has carved out a successful career in television on her own. Lachlan and James did jockey for position for 25 years. There was a period where in 2005, Lachlan did quit the empire. He stayed on the News Corporation board, but he'd fallen out with his father.

13:30And it was only after the phone hacking scandal that Rupert really persuaded and cajoled him to come back and work for him at 21st Century Fox. It's something you cover in the book, Paddy, but what is your assessment of Lachlan, the businessman? He has had some pretty big missteps over the years. Yeah, he certainly has. In Australia, you had the collapse of a mobile telephone company at the end of the 90s and in the middle of the tech wreck in the early aughts called OneTel. It cost News Corporation more than half a billion dollars that was written off in that collapse. If you fast forward, Lachlan had an unsuccessful private investment in Channel 10, which was one of the commercial free-to-air broadcast channels in Australia, ultimately sold to CBS after it went broke.

14:23But Lachlan has had his share of wins as well. One of the early ones was he picked up for a song a controlling interest in a digital real estate company called realestate.com.au. And depending on the share price on a given day, that is sometimes worth more now than News Corporation itself. And I think it's interesting that if you track Lachlan's private investments and some of the deals he's made as chief executive in the last six years at Fox Corporation, they're not investments that add to his political power. If you look at Rupert Murdoch's career, what did he want? He wanted the power. But Lachlan has invested differently.

15:05He's invested in online real estate or commercial radio. He invests as CEO of Fox Corporation in Tubi, a free ad support of the streaming service. That doesn't burnish his political clout. These are not things that are designed to increase his influence in Washington or London. These are things that are designed to make money. And I think that is characteristic of Locke. What do we know then of his own political ideology? I think Lachlan has grown increasingly conservative. He has always described his politics as socially small-l liberal, but economically conservative. Progressively, that has become more and more.

15:50I think he's skewed much more to the conservative side. And he's been very keen. Often people in America on the right, they mistake James and Lachlan. They're aware that the brothers, and they believe that the two brothers were the same, and not as conservative as Rupert. And I think that Lachlan has had to prove his conservative credentials and distinguish himself from his younger brother. Do you think that Rupert sees much of himself in Lachlan, that that is why he favours him so? Rupert Murdoch is a world historical figure and Lachlan could not ever possibly live up to the achievements. I think he decided pretty early on that he wasn't going to try.

16:35He wasn't going to try to outdo his father. In some ways, Lachlan was the last person standing. I think Lachlan broke his father's heart when he quit the empire in 2005. Inside the company where I was working at the time, that was the way it was seen, that Lachlan was Rupert's favourite. I don't think Rupert necessarily sees himself in Lachlan. Lachlan is a very different character, but I think he feels that he can count on Lachlan in a way that just made it untenable for anyone else to be the successor. Paddy, we've mentioned the TV series Succession a few times on the podcast already. I mean, I'm just wondering how close to the character of the number one boy, Kendall, How close Lachlan actually is to that?

17:24No, I think Lachlan is Roman. And I think Kendall is James. Kendall is the man who quits on principle. And I think that's where James ended up. Inside the Empire, he ended up quitting on principle. And I think Lachlan is the Roman character who in the end takes over ATN. There's a moment where Logan turns to Roman and they have a little conversation along the lines of, I need you to do this for me. I think that was one of the most real moments in the series. I think something very like that actually did happen at a point in time in 2013-14 where Rupert was reeling from the phone hacking crisis, splitting the company.

18:13also going through a separation with his third wife, Wendy Deng. And I think at that point that Rupert was vulnerable and Lachlan felt a sense of duty towards him. He was asking for his help. When he did hear that from Rupert, that's when he decided, yes, he would rejoin on, I think, condition that was probably negotiated that James would be reporting to him. And then we really did have the rivalry starting between the two as they jockey for position inside 21st Century Fox. I think there's also an interesting possibility you're now looking at, with Lachlan secure in the succession, a fourth generation of the Murdochs emerging in the business.

18:57This family has survived in the media for a century. Sometimes people say technology just changes the field, but the players remain the same. You can imagine that Lachlan and his wife, Sarah Murdoch's children might want to enter the business. And what Lachlan has secured with this deal is to clear the way for them to do that. Well, we'll see what's going to happen, won't we? Paddy, pleasure to talk to you. Thanks for your time. That's your lot for today. Just a heads up, though, before we go, that Sky News is hosting a big immigration debate on Wednesday evening. Watch it on Catch Up if you've missed it, as I'm going to be speaking to the host, Sky's Trevor Phillips, on the next edition of The Daily.

19:37Till then, do take care.

19:43Hello, Ed Conway here. Here is what might sound like a slightly random question. What do AirPods, bananas and a pair of shoddily made running trainers from the 1970s have in common? On the surface, not very much. But on my podcast, Stuff Matters, I will uncover the deeper stories behind each of them, you will see how together they tell a fascinating new story about the world we live in. The first full series of Stuff Matters is out now. Just search for it on your podcast app and follow.